WEBVTT - Daybreak Weekend: US CPI, Europe Energy, RBA Decision 0:00:00.240 --> 0:00:07.720 Bloomberg Audio Studios, Podcasts, radio news. 0:00:10.200 --> 0:00:13.160 This is Bloomberg Daybreak Weekend, our global look at the 0:00:13.160 --> 0:00:15.680 top stories in the coming week from our Daybreak anchors 0:00:15.800 --> 0:00:18.400 all around the world. Straight Ahead on the program, we 0:00:18.440 --> 0:00:21.120 look ahead to some key inflation data in the US 0:00:21.120 --> 0:00:23.840 and how they may affect FED policy moving forward. I'm 0:00:23.920 --> 0:00:25.720 Nathan Hager in Washington. 0:00:25.880 --> 0:00:28.880 I'm Caroline Hepke in London, where we're examining the extent 0:00:28.960 --> 0:00:32.360 of Europe's energy crisis with earnings in focus. 0:00:32.600 --> 0:00:35.839 I'm Doug Krisner, looking ahead to next week's rate decision 0:00:35.880 --> 0:00:37.720 from the Reserve Bank of Australia. 0:00:38.360 --> 0:00:42.400 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:42.400 --> 0:00:46.120 eleven three YEO New York, Bloomberg ninety nine to one, Washington, DC, 0:00:46.600 --> 0:00:51.760 Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Syrias, 0:00:51.920 --> 0:00:55.440 XM one twenty one, and around the world on Bloomberg Radio, 0:00:55.480 --> 0:00:57.640 dot Com and the Bloomberg Business App. 0:01:02.600 --> 0:01:05.440 Good day to you. I'm Nathan Hager. We begin today's 0:01:05.440 --> 0:01:08.440 program with some key inflation data in the US. The 0:01:08.520 --> 0:01:12.160 Consumer Price Index for July comes out Wednesday, followed by 0:01:12.200 --> 0:01:15.400 producer Prices on Thursday, plus a read on how consumers 0:01:15.400 --> 0:01:18.160 may be dealing with higher prices when we get retail 0:01:18.200 --> 0:01:21.000 sales for the month of July. On Friday, for more 0:01:21.120 --> 0:01:23.399 on what we can expect from all this data, we 0:01:23.440 --> 0:01:26.559 were joined by Bloomberg new senior strategist Edward Harrison, of course, 0:01:26.600 --> 0:01:29.720 the author of the Everything Risk newsletter. Great to see 0:01:29.760 --> 0:01:32.120 on the weekend, ed thanks for coming in. So what's 0:01:32.200 --> 0:01:35.679 the risk that price pressures pick up in July? 0:01:36.480 --> 0:01:38.360 That is a good question. I think the risk that 0:01:38.400 --> 0:01:43.399 they pick up is not what's currently discounted by the market. 0:01:43.440 --> 0:01:46.600 The market is thinking that we had inflation of two 0:01:46.640 --> 0:01:50.480 point six percent and that inflation will fall to two 0:01:50.520 --> 0:01:53.960 point five percent going forward. This is the core number 0:01:53.960 --> 0:01:57.920 that I'm talking about now. The broader number is going 0:01:58.000 --> 0:02:01.280 to be above three percent, but the Federal Reserve generally 0:02:01.320 --> 0:02:02.960 looks at the core number because that gives them a 0:02:03.040 --> 0:02:06.880 sense of where the overall trend is going. 0:02:07.480 --> 0:02:12.040 So, where do we see price pressures continuing right now? 0:02:12.200 --> 0:02:16.799 And are we still on the disinflationary track even if 0:02:16.840 --> 0:02:18.760 we don't see changes to Fed policy. 0:02:19.240 --> 0:02:21.880 I would say that we're not on the disinflationary track, 0:02:22.160 --> 0:02:26.240 and that is the problem for the Federal Reserve that 0:02:26.639 --> 0:02:30.200 we've stopped disinflating. That is, inflation is not going down further, 0:02:30.680 --> 0:02:34.079 it's and and potentially it's rising more. And part of 0:02:34.120 --> 0:02:36.280 the reason is is because when you look at numbers 0:02:36.520 --> 0:02:40.200 like services, I think a lot of people look at 0:02:40.240 --> 0:02:45.000 something called super core services. Both for the number that's 0:02:45.160 --> 0:02:50.080 used for personal income and expenditures that's the PCE number, 0:02:50.120 --> 0:02:52.160 and then this number that we're going to see this 0:02:52.200 --> 0:02:56.000 week later on, both of those numbers, those super core 0:02:56.120 --> 0:02:59.639 numbers are higher than the baseline number. And what it 0:02:59.720 --> 0:03:03.519 says is that even if you look at core, you're 0:03:03.560 --> 0:03:08.440 not looking at a number that is reflective of some 0:03:08.520 --> 0:03:13.360 of the percolating inflationary symptoms that are in the economy. 0:03:13.400 --> 0:03:17.000 So what's keeping those services numbers higher? And is there 0:03:17.000 --> 0:03:20.639 anything that Fed policy can do to bring them back down? 0:03:20.639 --> 0:03:22.560 Are you saying that there is a risk that we 0:03:22.840 --> 0:03:26.679 could start to see the FED think about invoking policy 0:03:26.720 --> 0:03:28.400 to get some of those prices back to where they 0:03:28.400 --> 0:03:28.880 want them. 0:03:29.200 --> 0:03:33.160 Yeah, we definitely could. I think we're seeing definitely financial 0:03:33.160 --> 0:03:36.400 services as part of that. Healthcare is another part of that. 0:03:37.000 --> 0:03:40.040 Generally speaking, what we're seeing is if supercore services is 0:03:40.160 --> 0:03:43.520 well above three percent three point eight percent, actually using 0:03:43.840 --> 0:03:48.640 the PCE version that says that at its core numbers 0:03:48.680 --> 0:03:52.800 that geopolitical risk has nothing to do with are high, 0:03:52.880 --> 0:03:55.360 and therefore the Fed might have to go against that. 0:03:55.760 --> 0:03:59.000 We saw last week, however, on Friday, that when the 0:03:59.080 --> 0:04:03.200 jobs numbers came out, they were relatively poor. That is, 0:04:03.280 --> 0:04:07.280 the non farm payroll number was down, the unemployment number 0:04:07.640 --> 0:04:11.040 was lower, which is good, but it was just enough 0:04:11.080 --> 0:04:13.280 to make people think that the Fed will not raise 0:04:13.320 --> 0:04:16.520 interest rates at its next meeting, nor is it completely 0:04:16.520 --> 0:04:18.200 priced in for the meeting after that either. 0:04:18.400 --> 0:04:20.840 As you mentioned, with those jobs numbers, it does seem 0:04:20.839 --> 0:04:22.600 as though the market is giving the Fed a little 0:04:22.600 --> 0:04:25.799 bit of a breathing room when it comes to policy. 0:04:26.400 --> 0:04:30.960 But if we see a pretty elevated inflation number, does 0:04:31.000 --> 0:04:34.400 that change the forecast? I mean, is there a possibility 0:04:34.680 --> 0:04:37.799 that we could see those numbers come in a little 0:04:37.800 --> 0:04:40.320 bit hotter. Definitely, we could see that. 0:04:40.360 --> 0:04:42.400 And one of the things that's behind that is Kevin 0:04:42.440 --> 0:04:46.159 Wortsz is the new Federal Reserve chairman, and he's been saying, 0:04:46.880 --> 0:04:48.559 we don't want you to look at what we're doing 0:04:48.680 --> 0:04:50.080 and what you think we're gonna do. We want you 0:04:50.120 --> 0:04:52.520 to look at the numbers and come up with your 0:04:52.560 --> 0:04:55.440 own thinking about that, And what that ultimately means is 0:04:55.520 --> 0:04:58.560 every single time that we get a data print, the 0:04:58.600 --> 0:05:02.479 market will be more volatile in terms of reacting to 0:05:02.520 --> 0:05:05.479 that specific number then it was in the past, because 0:05:06.040 --> 0:05:09.120 we're getting less information from the Federal Reserve about what 0:05:09.160 --> 0:05:11.359 they're going to do, that less forward guidance from the 0:05:11.360 --> 0:05:13.880 Federal Reserve. So if that number comes in hot, as 0:05:13.920 --> 0:05:16.720 you say, Nathan, then I think that the markets will 0:05:16.760 --> 0:05:17.799 react negatively. 0:05:18.360 --> 0:05:21.320 Of course, we saw some reporting this past week that 0:05:21.960 --> 0:05:26.680 the Chairman is keeping open the possibility of hiking interest 0:05:26.720 --> 0:05:30.040 rates if inflation prints do come in too hot after 0:05:30.160 --> 0:05:32.760 the relative lack of guidance that we got at the 0:05:32.839 --> 0:05:35.320 last FED meeting, is there a chance that we could 0:05:35.400 --> 0:05:38.640 see the Fed lean toward a hike just to get 0:05:38.680 --> 0:05:40.120 back some of that market credibility. 0:05:40.640 --> 0:05:44.240 Well, potentially. However, the jobs number that we saw last 0:05:44.279 --> 0:05:48.040 week took a lot of the impetus out of that move, 0:05:48.200 --> 0:05:50.599 because now the market's not even pricing it. If the 0:05:50.600 --> 0:05:54.080 market's not pricing it, then the Fed may not do 0:05:54.160 --> 0:05:56.200 it as a result of that. It's hard to say, 0:05:56.200 --> 0:05:57.320 because we're in a new regime. 0:05:57.400 --> 0:05:57.679 Now. 0:05:57.960 --> 0:06:01.680 But if the Fed does not raise rates in September, 0:06:02.120 --> 0:06:05.680 then suddenly you're in a situation where October, which is 0:06:05.800 --> 0:06:08.840 right before an election, is the potentially the first time 0:06:08.839 --> 0:06:12.120 that you're going to raise interest rates. So legitimately September 0:06:12.200 --> 0:06:17.760 is probably a better time just from a purely practical stance, 0:06:17.839 --> 0:06:22.080 given that Donald Trump is a vocal FED critic, but 0:06:23.040 --> 0:06:25.280 it's hard to say how the Fed is thinking about that. 0:06:25.480 --> 0:06:27.719 I really appreciate this set again, Thanks so much for 0:06:27.760 --> 0:06:30.360 coming on with us on the weekend. That is Edward Harrison, 0:06:30.640 --> 0:06:33.440 senior strategist for Bloomberg News and the author of the 0:06:33.480 --> 0:06:36.359 Everything Risk newsletter. Let's take a look now at some 0:06:36.400 --> 0:06:38.880 stocks making news in the week ahead. I'm Nathan Hager, 0:06:38.960 --> 0:06:42.640 joined by Bloomberg News reporter Judy LaGrue, and the earning 0:06:42.760 --> 0:06:46.120 story continues well right away on Monday when we hear 0:06:46.200 --> 0:06:49.040 from Him's and hers after the closing bell. I mean, 0:06:49.040 --> 0:06:51.599 it feels like healthcare earnings have been going pretty good 0:06:51.640 --> 0:06:55.320 so far this season. Does that include telehealth, Judy? 0:06:55.360 --> 0:06:57.359 Do you know tell my health is having a really 0:06:57.440 --> 0:07:01.239 interesting sort of season with this earning season. But Hyms 0:07:01.240 --> 0:07:04.680 and Hers, I think is certainly a space to watch 0:07:04.720 --> 0:07:07.520 for a lot of investors. The company is be EPs 0:07:08.200 --> 0:07:10.920 estimate six of the last ten quarters. It's you know, 0:07:10.960 --> 0:07:13.559 really seen a lot of growth recently, however, that growth 0:07:13.600 --> 0:07:16.800 is kind of slowing down right now. So reported subscriber 0:07:16.840 --> 0:07:20.280 growth was about thirty five percent for sixteen straight quarters, 0:07:20.640 --> 0:07:22.960 but for the last two quarters growth has been nine 0:07:23.000 --> 0:07:26.560 percent and about thirteen percent perspectively. So I think what 0:07:26.640 --> 0:07:29.840 a lot of investors are really looking at is how 0:07:30.200 --> 0:07:36.440 Hymns ticker HIMS is responding to that slowing growth. So 0:07:36.840 --> 0:07:40.840 stock movement is also an interesting space to watch. The 0:07:40.880 --> 0:07:43.600 stock is down about nine percent this quarter alone, so 0:07:44.200 --> 0:07:48.520 definitely for investors looking to see Hymns and Hers earnings 0:07:48.600 --> 0:07:51.400 results and then how that stock will respond to the 0:07:51.440 --> 0:07:52.160 growth and report. 0:07:52.520 --> 0:07:55.200 Yeah, it's interesting, Judy. Ahead of this earnings we heard 0:07:55.280 --> 0:07:58.880 Hymns announce a new app with a doctor led AI 0:07:59.400 --> 0:08:03.640 native experience. I think anytime anybody hears the letters AI, 0:08:04.080 --> 0:08:05.600 their ears start to burg out. 0:08:05.800 --> 0:08:09.520 That's right, that's right, Nathan, And I think for Hymns 0:08:09.640 --> 0:08:13.000 and Hers, certainly trying to really push the envelope with 0:08:13.040 --> 0:08:17.320 respect to getting their consumers to stick with them, I 0:08:17.320 --> 0:08:20.920 think is certainly paramount for the company. One item as 0:08:20.920 --> 0:08:24.080 of note is that there was an FTC or is 0:08:24.120 --> 0:08:29.280 an FTC rather lawsuit against his and Hers. The plaintiffs 0:08:29.320 --> 0:08:34.520 are FTC Utah and Los Angeles County, and the lawsuit 0:08:34.960 --> 0:08:39.160 is alleging that Hymns and Hers has misled customers into 0:08:39.240 --> 0:08:43.839 locking themselves into recurring subscriptions and that the company has 0:08:43.880 --> 0:08:48.520 shared private information with Meta and Snap despite saying that 0:08:48.559 --> 0:08:54.160 they were protective of customer privacy. So definitely, you know, 0:08:54.480 --> 0:08:56.720 I think investors will want to know what the company 0:08:56.760 --> 0:08:58.920 has to say about this. Certainly, the company has come 0:08:58.920 --> 0:09:03.240 out to say that the FTC lawsuit disregards substantial evidence, 0:09:03.640 --> 0:09:06.920 So look for analyst questions on that. Look for stock 0:09:07.040 --> 0:09:10.360 moves based on what management says about this. I really 0:09:10.400 --> 0:09:11.480 think it's a space to watch. 0:09:11.679 --> 0:09:16.240 Yeah, nobody likes illegal overhang over any company. The earning 0:09:16.280 --> 0:09:19.720 story continues on Tuesday and other tech name reporting in 0:09:19.960 --> 0:09:23.040 core Weave after Tuesday's close, putting a focus back on 0:09:23.240 --> 0:09:27.560 AI infrastructure after all the concerns about hyper scale spending. 0:09:27.880 --> 0:09:32.280 That's correct, Earnings from core Weave tick r cr WV 0:09:33.080 --> 0:09:37.200 will show whether enormous EI demand can outweigh the heavy 0:09:37.280 --> 0:09:41.440 cost of data centers and debt. Right, So the company 0:09:41.520 --> 0:09:44.120 is expected to report its highest revenue since their IPO 0:09:44.200 --> 0:09:47.520 in twenty twenty five. It's sort of Wall Street is 0:09:47.559 --> 0:09:51.160 expecting two point five billion in revenue this quarter, so 0:09:51.559 --> 0:09:55.280 you know, really looking at really how core Weave is 0:09:55.400 --> 0:09:59.520 managing that. And I think that Bloomberg Intelligence analysts really 0:09:59.559 --> 0:10:02.240 hit the new on the head that satan when they 0:10:02.280 --> 0:10:04.920 wrote that core Weave's second quarter earnings will signal to 0:10:05.000 --> 0:10:09.880 investors whether AI demand remains stronger than their share price implies, 0:10:10.559 --> 0:10:13.040 and they excited that they feel like the share price 0:10:13.080 --> 0:10:16.480 is underperforming, so they'll be looking at revenue specifically for 0:10:16.520 --> 0:10:21.160 their earnings, and Bloomberg Intelligence really believes that the revenue 0:10:21.200 --> 0:10:23.680 for Kreweve for the quarter could exceed guidance. 0:10:24.240 --> 0:10:26.800 Now, that would be a pretty big turnaround at a 0:10:26.840 --> 0:10:30.120 time when, as you know, Corewave's kind of missed more 0:10:30.160 --> 0:10:32.240 often than not when it comes to earnings. Is the 0:10:32.240 --> 0:10:35.800 bar pretty high then for core Weave to outperform this 0:10:35.880 --> 0:10:36.280 time around? 0:10:36.360 --> 0:10:38.720 I mean you're right about that, Nathan. The company has 0:10:38.720 --> 0:10:43.040 missed EPs estimates four times out of the last five quarters. 0:10:43.440 --> 0:10:46.480 So yes, definitely looking at that, looking at revenue, looking 0:10:46.480 --> 0:10:50.679 at EPs, and really understanding from management, and again the 0:10:50.720 --> 0:10:53.040 earnings call and comments are really going to be big 0:10:53.040 --> 0:10:57.040 here where they see the company going. Analysts, on the 0:10:57.040 --> 0:11:00.440 other hand, are quite bullish. Twenty nine buys eleven holds 0:11:00.520 --> 0:11:04.199 three cells. So again we'll be listening to that earning 0:11:04.440 --> 0:11:05.400 call quite closely. 0:11:05.840 --> 0:11:08.200 Yes, absolutely, we're also going to be listening, I think, 0:11:08.240 --> 0:11:12.200 to earnings from Kava they report on Tuesday as well. 0:11:12.720 --> 0:11:15.480 Is this one affected do you think by the produce 0:11:15.520 --> 0:11:17.760 scare that we've seen in fast food as opposed to 0:11:17.960 --> 0:11:18.760 fast casual. 0:11:19.000 --> 0:11:22.720 I mean, certainly anybody who touches lettuce is having a 0:11:23.040 --> 0:11:26.599 rough summer, I will say that. So, yes, we focusing 0:11:26.640 --> 0:11:31.640 on ticker c a VA. That's right, And so for analysts, 0:11:32.000 --> 0:11:35.400 the earnings for Kava Group really need to show that 0:11:35.520 --> 0:11:40.040 customer traffic, restaurant profits, and new store growth is remaining 0:11:40.080 --> 0:11:44.079 strong despite these headwinds we're seeing, right with the cyclospara, 0:11:45.000 --> 0:11:49.920 the parasite, and really understanding exactly what kind of slow 0:11:49.960 --> 0:11:53.439 down the company is seeing as a result of all 0:11:53.480 --> 0:11:58.760 of the headlines about food safety. In general, the stock 0:11:58.840 --> 0:12:01.960 is up around thirteen percent this year, but down about 0:12:01.960 --> 0:12:04.520 eleven percent this month, and when we put that in 0:12:04.600 --> 0:12:08.720 comparison to names like Shakeshack, which is up about thirty 0:12:08.720 --> 0:12:11.920 percent this month, Dominoes, which is up about seventeen percent 0:12:11.960 --> 0:12:16.520 this month. Really, Kava, I think it could represent in 0:12:16.600 --> 0:12:21.280 many respects close to the epicenter of this issue with cyclospora, 0:12:21.480 --> 0:12:24.800 as it pertains to let us and produce as it 0:12:24.880 --> 0:12:26.800 gets served in fast casual settings. 0:12:27.000 --> 0:12:29.480 Yeah, oh so, we'll be watching for those hungry for 0:12:29.520 --> 0:12:33.839 the earnings. Thank you, Judy, Judy LaGrue of Bloomberg News 0:12:33.880 --> 0:12:36.280 with stocks to watch, Judy, thank you for this. Coming 0:12:36.320 --> 0:12:39.199 up on Bloomberg day Break weekend, we'll examine the extent 0:12:39.280 --> 0:12:42.960 of Europe's latest energy crisis. I'm Nathan Hager, and this 0:12:43.520 --> 0:12:57.200 is Bloomberg. This is Bloomberg day Break Weekend, our global 0:12:57.240 --> 0:12:59.440 look ahead at the top stories for investors in the 0:12:59.480 --> 0:13:02.480 coming week. I'm Nathan Hager in Washington. Up later in 0:13:02.520 --> 0:13:05.040 the program will look to a monetary policy decision from 0:13:05.080 --> 0:13:08.120 the Reserve Bank of Australia. But first, in the coming days, 0:13:08.160 --> 0:13:10.920 we hear from some of Europe's biggest energy companies about 0:13:10.920 --> 0:13:14.240 their recent performance as reserves drop to new lows and 0:13:14.320 --> 0:13:18.880 geopolitical unrest drives up prices. How are the major players responding, 0:13:19.160 --> 0:13:21.520 let's head to London and bring in Bloomberg daybreak, europe 0:13:21.520 --> 0:13:23.520 banker Caroline hepger Nathan. 0:13:23.559 --> 0:13:26.520 European gas storage levels have fallen to their lowest for 0:13:26.600 --> 0:13:29.720 this time of year in almost two decades, after the 0:13:29.760 --> 0:13:32.640 war in the Middle East drove up prices and stalled 0:13:32.920 --> 0:13:36.520 winter stockpiling. The situation has left governments with a growing 0:13:36.640 --> 0:13:41.280 dilemma as colder weather approaches. At the start of this month, 0:13:41.480 --> 0:13:47.079 European Union inventories were only just about fifty seven percent full. Meanwhile, 0:13:47.080 --> 0:13:50.640 prices are still about eighty percent above pre war levels 0:13:50.679 --> 0:13:54.640 and remain higher than winter contracts, leaving little incentive for 0:13:54.760 --> 0:13:58.960 hoarding the fuel. And extreme temperatures are also a factor. 0:13:59.160 --> 0:14:02.079 A series of blossering heat waves in the region has 0:14:02.080 --> 0:14:06.079 weakened some of the most historically reliable sources of electricity, 0:14:06.400 --> 0:14:11.439 forcing more dependence on imported fossil fuels and variable renewable 0:14:11.600 --> 0:14:15.880 energy frances. Rather cooled nuclear power plants have suffered a 0:14:15.960 --> 0:14:20.600 recuid amount of heat related outages. Emi Ashford is head 0:14:20.640 --> 0:14:23.440 of Energy Structure, It's standard chartered bank, and says that 0:14:23.480 --> 0:14:28.800 the sector is facing a particularly pertinent combination of challenges now. 0:14:28.880 --> 0:14:33.120 Whether it's always mattered to the energy complex. It influences 0:14:33.160 --> 0:14:39.000 fuel demand, but increasingly extreme heat and drought affect refiners' 0:14:39.000 --> 0:14:44.080 ability to produce fuels efficiently, so we have simultaneous raising 0:14:44.160 --> 0:14:49.160 of demand and constraint in supply. Each individual effect is 0:14:49.240 --> 0:14:52.680 relatively small, but when you combine them, that amplifies pressure, 0:14:52.920 --> 0:14:56.320 and we've particularly seen that on middle distillert cracks and 0:14:56.440 --> 0:14:59.400 boosting of refinery margins over the summer month at the 0:14:59.480 --> 0:15:04.040 ice Ga Brent crack that reflects European diesel pushed over 0:15:04.160 --> 0:15:06.720 seventy five dollars at the end of July, a near 0:15:06.760 --> 0:15:09.920 twenty year high, and there is still further upside possible 0:15:09.960 --> 0:15:13.960 there if conditions worsen. And Europe is a particularly interesting 0:15:14.080 --> 0:15:18.160 case for this because most European refineries were designed decades 0:15:18.160 --> 0:15:23.120 ago for significantly cooler climates. And the limiting factor isn't 0:15:23.160 --> 0:15:26.640 the dis column itself, but it's the cooling systems. As 0:15:26.640 --> 0:15:31.000 we see ambient temperatures increasing, air coolers become less effective. 0:15:31.800 --> 0:15:34.440 Cooling water sources like you mentioned, such as the rivers, 0:15:34.640 --> 0:15:36.840 they warm, so they remove less heat, and there's an 0:15:36.880 --> 0:15:41.200 increasing risk of refiners breaching water discharge temperature limits. And 0:15:41.240 --> 0:15:44.440 we have operational safety limits which we can reduce runs 0:15:44.880 --> 0:15:47.160 taking processing units offline. 0:15:47.320 --> 0:15:50.600 That was Emily Ashford from Standard Chartered there speaking to 0:15:50.600 --> 0:15:54.240 Bimberg's Lizzie Burden and Anna Edwards. So this is the 0:15:54.480 --> 0:15:59.400 backdrop for earnings from utilities Eon and RWE and the 0:15:59.440 --> 0:16:02.920 wind ter buying manufacturer Vestas that will get in the 0:16:02.960 --> 0:16:06.680 next few days. Do mean now for more is Bloomberg's 0:16:06.680 --> 0:16:10.480 Brussels Buia chief Suzan Lynch and our energy reporter Aim 0:16:10.600 --> 0:16:15.040 and Fauhat Suzan. The energy crisis is affecting much of 0:16:15.080 --> 0:16:20.400 the European continent. What has the response been like in Brussels. 0:16:20.680 --> 0:16:25.000 Well, I think since the outset of the war in Iran, 0:16:25.360 --> 0:16:28.360 European officials have been keen to stress that this is 0:16:28.400 --> 0:16:31.720 not the same as a crisis that engulfed the European 0:16:31.840 --> 0:16:35.800 Union back in twenty twenty two, following the full scale 0:16:35.840 --> 0:16:39.440 invasion by Russia of Ukraine. Then we saw that big 0:16:39.600 --> 0:16:43.480 energy spike. Things have not gone as high as we 0:16:43.560 --> 0:16:46.640 have then. One reason the EU officials are keen to 0:16:46.720 --> 0:16:50.440 stress is that Europe has diversified its supply. Now it's 0:16:50.520 --> 0:16:54.800 not directly dependent on the Middle East for energy imports. 0:16:54.800 --> 0:16:58.160 For example, it is more dependent on places like the 0:16:58.240 --> 0:17:02.040 US Norway, although of course it is indirectly impacted by 0:17:02.040 --> 0:17:05.840 what's happening in the Straitform moves and around that region. 0:17:07.000 --> 0:17:10.320 Yeah, as you say, perhaps not too comparable to twenty 0:17:10.359 --> 0:17:13.200 twenty two when Russia first invaded Ukraine. That was towards 0:17:13.200 --> 0:17:15.679 the end of the COVID nineteen pandemic, wasn't it. But 0:17:15.720 --> 0:17:18.520 then lay of that with the war in Iran. And 0:17:18.880 --> 0:17:22.119 there are some issues, aren't there for the EU to 0:17:22.200 --> 0:17:26.000 deal with? I mean, how do you think this place 0:17:26.080 --> 0:17:30.000 into diplomacy between the EU and the US given this pressure. 0:17:31.280 --> 0:17:33.840 Well, as part of the EU US trade deal that 0:17:33.920 --> 0:17:36.639 was signed around a year ago between Arsena underlyon the 0:17:36.680 --> 0:17:39.520 head of the European Commission, and Donald Trump at his 0:17:39.600 --> 0:17:43.119 golf course in Scotland, a big part of that was 0:17:43.119 --> 0:17:45.960 a commitment by Europe to buy around seven hundred and 0:17:46.000 --> 0:17:49.719 fifty billion worth of US energy. Now we do know 0:17:50.080 --> 0:17:52.800 that the Europeans have been buying a lot of LNG 0:17:53.760 --> 0:17:57.639 from the US. Now, whether it's going to hit those figures, 0:17:57.680 --> 0:18:00.280 how you measure that, that's a whole other question. But 0:18:00.359 --> 0:18:02.680 that is certainly the case, and even in some quarters 0:18:02.720 --> 0:18:06.480 there's been talked about, is the European Union building up dependency. 0:18:06.480 --> 0:18:08.520 It's just got a rid of one dependency for Russia, 0:18:08.560 --> 0:18:10.919 and here it is kind of opening up potentially your 0:18:11.040 --> 0:18:13.679 dependency with the US at a time when of course 0:18:13.920 --> 0:18:17.199 relations between the US and Europe are at low. It 0:18:17.240 --> 0:18:19.679 has to be seen. But look, I'm not downplaying the 0:18:19.720 --> 0:18:22.480 issue here for the European Union. The reality is that, 0:18:22.720 --> 0:18:26.159 you know, the EU storage facilities have come to LNG. 0:18:27.400 --> 0:18:30.400 The gas are very very low. It's around fifty seven 0:18:30.440 --> 0:18:33.520 percent full. That's been the lowest in records going back 0:18:33.520 --> 0:18:36.880 to around two thousand and nine. And we have seen 0:18:36.960 --> 0:18:40.639 these LNG imports have been dropping since April because of 0:18:40.720 --> 0:18:44.359 the disruption and supply. Now again the European Union is saying, 0:18:44.480 --> 0:18:47.760 you know, not time to panic yet. It believes that 0:18:48.240 --> 0:18:52.800 fresh import will offset and those lower levels of storage. 0:18:53.080 --> 0:18:55.920 But undoubtedly it is an issue now as we get 0:18:55.960 --> 0:18:58.200 into the winter months. 0:18:58.640 --> 0:19:01.359 Yeah, it's already starts to turn even though it's August. 0:19:01.440 --> 0:19:04.280 You can feel that the daylight hours are becoming shorter 0:19:04.720 --> 0:19:07.719 in the UK at least. Really interesting, Suzan, thank you 0:19:07.760 --> 0:19:11.280 so much. Yeah, for those thoughts then about Europe. How 0:19:11.400 --> 0:19:15.320 Europe can try to ameliorate the energy situation after well 0:19:15.359 --> 0:19:19.879 a series of crises really in overlaying crises. Thank you amen. 0:19:19.960 --> 0:19:23.160 Let me turn to you then in terms of this 0:19:23.640 --> 0:19:26.919 well what i'll call a multi layered problem, a recurring 0:19:27.040 --> 0:19:30.440 problem of energy for Europe. What do you think there 0:19:30.560 --> 0:19:33.440 is about this particular moment that is so very difficult 0:19:33.520 --> 0:19:34.919 for the European energy market. 0:19:35.600 --> 0:19:37.399 I mean, I think this, as we always say this, 0:19:37.480 --> 0:19:38.920 a lot of it is about weather. I mean, we've 0:19:38.960 --> 0:19:41.840 had now this extreme heat this summer. Definitely some of 0:19:41.880 --> 0:19:43.520 it's predictable, you know, it's always hot in the summer, 0:19:43.560 --> 0:19:45.959 but it has been quite prolonged, and just now all 0:19:45.960 --> 0:19:48.200 these companies and all these different markets will be thinking 0:19:48.240 --> 0:19:50.359 about getting ready for winter. And when you have that 0:19:50.440 --> 0:19:52.960 kind of that winter looming with what's happening this summer, 0:19:52.960 --> 0:19:54.760 with lots of energy supplies being used up because of 0:19:54.800 --> 0:19:57.960 cooling demand, but also lots of issues with calling nuclear actors, 0:19:58.040 --> 0:19:59.920 meaning we have to use more call and gas apply. 0:20:00.320 --> 0:20:01.680 You know, it puts everyone in a bit of a 0:20:01.680 --> 0:20:04.600 difficult position going into the coming months as we prepare 0:20:04.600 --> 0:20:05.879 for those colder months ahead. 0:20:06.119 --> 0:20:10.040 Yeah, Suzanne was just mentioning though it's not really a 0:20:10.119 --> 0:20:14.280 crisis that you can compare to the invasion of Ukraine 0:20:14.359 --> 0:20:17.119 when that sensed such a shock across Europe in terms 0:20:17.160 --> 0:20:20.480 of the scale of this problem. Give us some idea 0:20:20.520 --> 0:20:21.720 of how you're thinking about it. 0:20:21.960 --> 0:20:23.600 Yeah, I mean, you're right, I think very quickly we 0:20:23.600 --> 0:20:25.520 start trying to draw those parallels, and we're not in 0:20:25.520 --> 0:20:28.280 the same position as we were back then. That being said, 0:20:28.320 --> 0:20:30.399 we are starting to see some i'd say warning signs. 0:20:30.400 --> 0:20:32.080 For example, when we look at some of the energy 0:20:32.080 --> 0:20:34.879 futures energy prices, they are going up to levels that 0:20:34.920 --> 0:20:37.280 we haven't seen since winter twenty twenty two. I think 0:20:37.320 --> 0:20:39.320 you're a sorry about Italy actually this week, which is 0:20:39.400 --> 0:20:41.240 very gas dependent, which just so one of their prices 0:20:41.240 --> 0:20:43.320 go up to the highest since December twenty twenty two, 0:20:43.320 --> 0:20:45.879 which is quite shocking. But we always say when it 0:20:45.960 --> 0:20:48.359 comes to again to winter, which is really where these 0:20:48.400 --> 0:20:50.800 effects are felt, it only takes, you know, a very 0:20:50.800 --> 0:20:53.760 cold snap, a difficult month to very quickly be in 0:20:54.000 --> 0:20:55.399 I'm not going to see the same position, but in 0:20:55.440 --> 0:20:57.399 a very similar position as we were back then. So 0:20:57.520 --> 0:21:00.639 although you're right, we're not there yet, everyone is very 0:21:00.680 --> 0:21:02.879 aware that that could change very quickly depending on the 0:21:02.920 --> 0:21:03.720 months ahead. 0:21:03.920 --> 0:21:07.439 So how are energy providers dealing with that situation? And 0:21:07.680 --> 0:21:10.680 as you say, are they therefore passing those price pressures 0:21:10.680 --> 0:21:11.719 onto consumers? 0:21:12.160 --> 0:21:14.080 Yeah, I mean when it comes to wholesale markets, as 0:21:14.080 --> 0:21:16.240 I said, the prices have been elevated because of the 0:21:16.600 --> 0:21:19.119 the around war, they are elevated because of the extreme 0:21:19.160 --> 0:21:21.600 heat this summer and also because of gas storage issues. 0:21:21.760 --> 0:21:24.199 Those prices do get passed on to consumers through their 0:21:24.240 --> 0:21:28.000 bills in different mechanisms in different countries. It has to 0:21:28.040 --> 0:21:31.000 be said that Europe has learned obviously since the last time. 0:21:31.040 --> 0:21:33.320 We've built a lot more resilience, whether that be expanding 0:21:33.320 --> 0:21:36.800 renewble energy, that be just kind of getting smarter about 0:21:36.800 --> 0:21:39.200 how we run our gread at different times. That's something 0:21:39.200 --> 0:21:41.439 that everyone is thinking about. But you know, again with 0:21:41.440 --> 0:21:44.200 renewable energy, there are lots of things that can affect that, 0:21:44.400 --> 0:21:46.480 whether there's less wind for a period of time, So 0:21:46.680 --> 0:21:49.520 it still creates vulnerabilities and there's no kind of golden bullet, 0:21:49.520 --> 0:21:52.439 but it's just about trying to mitigate every ventrality that 0:21:52.480 --> 0:21:54.240 could lead to those difficult times. 0:21:54.359 --> 0:21:56.720 Okay, in the next few days, we've got earnings from 0:21:56.800 --> 0:22:02.080 some major companies, utilities, businesses in Europe from Eon, our 0:22:02.280 --> 0:22:05.880 we also vest us. What are we expecting in terms 0:22:05.880 --> 0:22:09.679 of Eon and RWE earnings and will some of these 0:22:09.800 --> 0:22:12.159 themes be evident in their reports? 0:22:12.680 --> 0:22:14.840 Yeah, I mean, I think these these companies operate across 0:22:14.880 --> 0:22:17.560 different parts of the energy landscape. I mean, Eon, they 0:22:17.560 --> 0:22:19.520 do lots in the grid space, and grids have been 0:22:19.560 --> 0:22:21.800 really important this summer as far as resilience goes, making 0:22:21.800 --> 0:22:23.879